Business Daily
Date: 12.06.2015
Page 15
Article size: 175 cm2
ColumnCM: 38.88
AVE: 73888.88
CBK rate hike triggers mixed reactions
What the Central Bank of
Kenya has done is very
cruel to the poor. There
are three ways to prevent strong im­
port demand from wiping out our
forex reserves of $6.7billion.
One, increase interest rates (re­
duce the money supply). This is what
the CBKhas done. It'll benefit import­
ers but devastate local producers.
Second, allow the shilling to float.
It'll devastate importers but benefit
local producers. Third,borrowforex
from the IMF andbond markets like
Central Bank of Kenya headquarters in Nairobi.file
Wall Street and London. This is pret­
ty much comparable to an alcoholic
buyingbooze on credit.
Disillusionedlocal producers will
justbuy cheap dollars to invest inlow­
as a country. Thus, the basis for strik­
ing a balance because economics is
about striking a balance.
MungaiMwangi
interest countries.
NjonjoNdehi
It's a "smart" and best move if
lion. Monthly exports
$450 million. We still
needed to raise interest rates.
connected to the rule­makers.
We are reaching that debt ceiling
pretty fast and debt service pay­
ments as well as interest payments
on Eurobonds are burdening our
treasury. Borrowing further is a
vicious cycle. I expect rates to rise
further and closer to the 11­12 per
cent range before year­end as im­
ports accelerate and govt demand
here. Lets eat!
KenyaRenaissance
w
at we need to find out
first is whether we are a
¥ ¥ n
net importer or exporter
infrastructure development.
Sura Mbaya
Monthly imports $1.8 bil­ Tfie trade deficitis our Achil es
the importers are somehow
Like the elite say, the poor have al­
ways been here and will always be
for forex rises due to debt funded
heel and it will be for years to
come. We have taken on huge
projects that require repayment that
are not matchedby tax receipts. This
is the trap Greece embarked on just
prior to the Athens Olympics.
Our saving grace might be the
debt to GDP ratio. If we have to­
survive then we will have to put a
serious and persistent damp on it.
Am seeing 13 per cent minimum
CBRrate.
Eric Nyaga
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya